Which way the water flows
November 2, 2007
Denver — The head of the Colorado Department of Natural Resources stirred up a tempest Wednesday in the Legislature’s interim Water Resources Review Committee with a suggestion that two big pots of money used to pay for water projects be merged into one.
Harris Sherman proposed combining the Colorado Water Conservation Board’s construction fund, used largely for nonreimbursable grants, with the perpetual base account, which is used for low-interest loans. A combined account would total an estimated $536 million, a CWCB budget analyst said.
Both funds are recipients of federal mineral lease revenue and severance taxes paid to the state for oil, natural gas, coal and other mineral extraction in Colorado.
“By combining the two, there would be greater flexibility to provide ongoing loans and grants to communities throughout state and allow us to address new opportunities for state and private water partnerships,” Sherman said. “It would give us the ability to make grants with greater flexibility than we’ve ever had before.”
Sherman also proposed capping the amount appropriated to the construction fund from federal mineral lease revenue at $16 million for each of the next 10 years.
The construction fund currently gets the first 10 percent of FML revenue, which has been between $12 million and $13 million for each of the last two years. Without a cap, that amount could grow significantly because of increased oil and natural gas drilling on Bureau of Land Management and other federally-owned land in western Colorado.
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“The idea of capping the federal lease contribution is very important to us,” Sherman said, adding that “moving certain funds from FML revenue and the CWCB account to other, still undefined, purposes” grew out of another interim committee that is looking into how severance tax revenue is allocated.
Sherman’s proposals, however, didn’t sit well with lawmakers from both sides of the Continental Divide, including the interim water committee’s chairman, Sen. Jim Isgar, D-Hesperus.
“I’m not convinced we ought to be capping the trust fund,” Isgar said. “If we change the perpetual base account : to meet a shortage in the construction fund, then it’s no longer perpetual. I’m OK with growth in both”
Republican Sens. Greg Brophy of Wray and Jack Taylor of Steamboat Springs said they feared the proposal was an indication the administration of Gov. Bill Ritter is backing away from a commitment to building more water storage projects in Colorado.
Sherman is a Ritter appointee.
“I would be very hesitant to cap that part of the severance tax fund,” Brophy said. “We need to move forward with water storage and construction. Trying to fund them from somewhere else would be competing with other interests. If we keep them segmented for water purposes, it would be harder to lose them.”
Taylor was even more skeptical.
“I’m very concerned about the appearance of a philosophical change as to whether we need to have more water storage or not,” Taylor said. “The future of our sate is in water. We have to figure out where to build storage.”
Sherman rejected Taylor’s assertion.
“We are committed to the importance of storage, both above and under ground,” he said.
Sherman said he would continue working on bill for introduction in next year’s General Assembly despite the tepid response from the interim water committee.
“We are trying to address what we see as interest in balancing a whole lot of statewide needs,” he said. “Regardless of whether there is a cap or not, there is still reason to combine the funds.”
The water committee also got a preview of the annual CWCB construction bill, which determines which water projects get funded through either grants or loans.
The initial draft of the bill includes a $40 million loan for construction of a pipeline in southeastern Colorado to deliver water to Kansas and avoid litigation under the Republican River compact.
“The pipeline is the only was to come into compliance without sheer economic devastation,” said Rep. Cory Gardner, R-Yuma. “There is absolute coalescing around the idea of a pipeline as the only near-term solution that will save eastern Colorado.”
It initial draft of the construction bill, which still requires CWCB approval, also contains three separate grants totaling $800,000 to deal with Colorado’s compliance under the Colorado River Compact. The largest of the three ($500,000) would be used to begin studying how to curtail use of Colorado River water should the state come up short in its delivery to downstream states.
“We are not near a situation where actual curtailment will be required but we need to get started on ways to look at it,” said CWCB staff member Randy Seaholm. “We don’t want to get too far out in front on this, but we need to make sure what we get charged is shared equally with other Upper Basin states.”